As the Share of Healthcare Expenditures Paid for by Third

question 121

Multiple Choice

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

• A) Yes; third-party payments provide healthcare consumers with a strong incentive to economize, and therefore, the growth of expenditures is particularly surprising.
• B) No; third-party payments weaken the incentive of healthcare consumers to economize, and therefore, the rapid growth of expenditures is an expected result.
• C) Yes; the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party.
• D) No; the growth of third-party payments will reduce the demand for healthcare, which will lead to both higher prices and expenditure levels.

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Definitions:

Outside World

Everything that exists outside of one's mind or personal experience, including physical reality and the environment.

Sympathetic Nervous System

A part of the autonomic nervous system that prepares the body for physical activity by increasing heart rate, dilating airways, and other physiological responses.

Mobilizing

The act of preparing and organizing resources or people for action or use.

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, involved in connecting the CNS to limbs and organs.